A garment salesman who lives in a chawl in Santacruz East in a joint family, his contribution to the family kitty has gone up by Rs 2,000 in the last eight months. “When I was earning Rs 4,000, I managed to save Rs 50-100 a day. Now I earn Rs 30,000 a month, and it still isn’t enough.”
“They talk about subsidies, yet all oil companies are making horrendous profits. If there are losses, it should reflect on the balance sheet,” says Delhi-based Rajesh Dixit, an assistant manager with an insurance company, angrily. This anger is not without reason. While Dixit (the man featured on the cover of this issue) struggles to juggle his household budget—already burdened with the expense of sending two children to school and poor savings that are inadequate to fund a house of his own—the ‘unjustified’ Rs 7.50 hike in petrol prices has got this affable-looking fellow real mad.
That’s because he’s smart enough to figure out that the six state-run oil companies (including three oil marketing companies) have together posted over Rs 38,401 crore in profits for 2011-12. For a year now, the oil marketing companies have been crying themselves hoarse about huge losses thanks to government subsidising transport and cooking fuel prices. Admittedly, the government subsidy transfer and cross-subsidies may have helped oil marketing companies to register higher profits. But it is also apparent that the government is not being transparent, as Dixit rightly points out.
(Photograph by Sandipan Chatterjee)
Mr & Mrs Labdha Bijoy Choudhury Calcutta
A manager at Alstom, Choudhury’s family survives on one income after wife Shilpi quit on the birth of their son. They pay EMIs on a home and car loan, and are unhappy about the likely axing of LPG subsidy and raising of petrol prices. “I bought a car but feel guilty about using it,” he says.
Why should middle-class families like Dixit’s be penalised by higher petrol prices when the government fails to provide the rationale for the fuel price hike at a time when crude prices are easing? That’s a valid question many people are asking, adding carefully that it’s not a demand for relief for ‘rich’ car-owners. Millions of people in the low to middle class group use two wheelers, or have just graduated to buying their first car. They pay their taxes (a mammoth 89 per cent of income-taxpayers earn between Rs 2 lakh and Rs 5 lakh per annum) and aim for a better future on tight budgets and big dreams. Why should these people be clubbed with India’s 50-million rich and 1,70,000-strong super-rich categories?
The latest petrol hike has fuelled the feeling that while the rich receive tax sops and the poor are cushioned by subsidies (often inefficiently delivered), the middle class is, yet again, being taken for granted. “This petrol hike situation is bizarre,” says the head of a leading brokerage and investment firm. “The oil companies first argued decontrol, then said control and instead of hiking the price at a 50-paise basis, they’ve gone and done it in one shot. Who isn’t going to protest a Rs 7.50-hike at one go?”
Dixit is not among the hundreds staging protests or resorting to arson in response to the national bandh call by the Opposition parties against fuel price hike. But one thing is clear: a sense of anger, frustration and helplessness seems to be gaining ground among millions of middle-class families as the GDP growth slows to 6.5 per cent in 2011-12 fiscal—the lowest since 2003-04 and a sharp fall from levels closer to 9 per cent during the earlier period of the UPA government. For the generation that benefitted the most from the economic reforms, the last two years have brought home a new, worrying reality. Always under pressure, now their dreams and aspirations are under threat. Indeed, the impression is growing that their future is being sacrificed at the altar of power politics.
One may dismiss these outpourings as typical middle-class whining. But are they unjustified? Take Gurgaon, touted as Millennium City, which often has to go without power and water supply for long hours—even 24 hours—while waste disposal and other civic infrastructure continue to be missing. A survey across the country would reveal that many cities, including Jaipur, Agra, Patna, Thiruvananthapuram, among others, are sadly lagging in civic infrastructure.
And when it comes to sops for enterprises or subsidies for food and cooking fuel or even access to education, guaranteed employment or healthcare insurance schemes, the lower middle class doesn’t even get a peek in. The latest quarterly survey by the RBI (see graphic) shows that consumer optimism about the future is dipping. “Earlier we bought things by looking at the brand,” says Prabha Jha, a resident of Ghaziabad. “Now we buy looking at the price and always wait for a sale.”
(Photograph by Tribhuvan Tiwari)
Mr & Mrs Rahim Khan New Delhi
A maths teacher who earns Rs 3 lakh annually taking tuitions, the biggest challenge for Khan is ensuring a good education for his own four children. “Though there are many scheme for us, they remain out of reach. For everything you need ID proof, or a bribe.”
Prabha’s dilemma is echoed by the cross-section of people and families Outlook correspondents spoke to across the country. From high food inflation, escalating prices of most household items to double if not three-fold hike in school and college fees, rising transportation and utility bills to more expensive services—most families have now started feeling the pinch. “Even affluent people have started discussing these increases over drinks often enough over the last few months, so one can just imagine what the impact is on the low- to mid-income segment,” stresses Anirudha Dutta, executive director, CLSA.
And they are a huge number. By conventional definition, the (largely urban) middle class ranges between 160 million and 300 million people. If you include a larger definition—middle-income families that include people who earn between Rs 45,000 and Rs 2 lakh per annum (think office boys and masons, drivers and maids, among others)—then the number of people goes up to more than double, to 600-800 million people. This segment has the greatest stake in the economic growth of India—and they are feeling insecure about their future.
A combination of external factors—and a lack of confidence domestically—have put the India story under pressure. A few hard facts on the ground show why:
In fact, the middle class has been taking a battering since the economic slowdown in 2008, its first real post-liberalisation shock. India’s opening up to foreign goods and access to easy credit have over the last few years fuelled demand for branded goods. With the pressures of everyday living eating into discretionary funds and the cost of credit having gone up, the budget for mall-hopping today has shrunk. “The consumption growth (that fuelled economic growth) was driven by expectations of future growth. While expectations have grown on anticipation of income rise, the growth has clamped down, so there is bound to be anxiety,” says Vibha Paul Rishi, executive director, brand and human capital, Max India Group.
The problem is, the middle class has been left to fend for itself—and no one is talking to it as the political system continues to ignore this constituency. Santosh Desai, social commentator and CEO of Futurebrands India, says that the UPA government and most parties across the spectrum send out the signal that the middle class does not count as a votebank. “They feel that with the group not being significant in number, why listen to their whining. It is also never clear whether their anger is real, and if so, is it temporary,” says Desai.
However, social activist Nikhil Dey thinks one cannot blame the political class for not taking the urban middle class very seriously, “as it has not shown any propensity to keep to any issue in a sustained manner”. In fact, a common observance of the middle class is that it has a magnified sense of self and a perceived sense of neglect. This class of divergent people rarely comes together as a force, and their sense of power does not get translated into electoral power.
(Photograph by R.A. Chandroo)
Mr & Mrs Balasubramnian Chennai
A sales executive in a software company earning Rs 8 lakh a year, he finds it increasingly difficult to save for the education of his two children. “I’m most upset about the rising fuel prices,” he says. “Earlier, I’d spend Rs 5,000 a month on fuel, then Rs 6,000. Now, I’ll pay an extra Rs 1,000.”
But the Anna Hazare-led movement against corruption last year put a lie to that notion. It was an indication of the middle-class’s need to find a political space. Middle-class activism also gained strength on online forums and via NGOs. Sadly, the enthusiasm remained shortlived, and like the television TRP, middle-class activism too disappeared soon from the radar, making it convenient for the political class to shift focus.
And in the current economic scenario, when there is no threat to life or livelihood, it seems unlikely that the middle class will push for a long battle, including against corruption—though inflation remains a concern. According to this point of view, with growth in most sectors having flattened, it is directly impacting rise in salaries and leading to “some frustration”.
Other observers feel that the middle class has no reason to be optimistic as the government continues with populist measures in the name of inclusive growth. That’s the reality in a country with so many poor people. Diplomat-author Pavan K. Varma feels the middle class is facing a double jeopardy. “When the economy slows down, the middle class, which has been the beneficiary of higher growth, is likely to be the first to be hit. And it is precisely during such times that the government’s focus shifts to the larger population of poor to ensure benefits reach them.” But, as Usha Ramanathan, an expert on development and poverty issues, says, while several policies are formulated for the poor, they are not implemented properly and as such the benefits rarely reach them.
At the root of the present crisis is the government failure to carry out the promise it made in its 1991 budget: of administrative reforms, as also ensuring social protection and quality of employment. “The assumption that we will collect from the people and spend on the people is at fault as the rich are always seeking ways to dodge taxes. There is no political will to charge the rich high taxes,” says Dr Indira Hirway of the Ahmedabad-based Centre for Development Alternatives. She cites the resistance to Right to Education as an example, with the middle class thwarting the attempt to uplift the lower classes and be included in their domain.
This resistance apart, the competition for the limited number of seats in good schools and colleges is becoming tougher, with more and more youngsters from poor families using the education ladder to better their lot. This is the same route used by the yesteryear lower middle class, particularly with competence in English, to chart success stories, points out Ajit Balakrishnan, the chairman of Rediff.com. As democracy deepens, the middle class, Balakrishnan says, will feel “more anxiety-struck” as people from financially weak backgrounds will become more aware and seek better opportunities.
Under pressure on all fronts then, this is a fresh moment of trial for the middle class. With such poor mood, the economy will go through some turbulence. Many say the Indian middle class—dogged, resolute and always optimistic—will eventually prevail. If that sounds a bit like the “India story”, the middle class (complaints and all) will continue to bear that cross.
The Middle Class Mess
Sources: NCAER, Parliament questions, Finance Ministry, RBI
Death Of A Dream
By Lola Nayar with Arti Sharma, Pragya Singh, Arindam Mukherjee, K.S. Shaini, Dola Mitra and Pushpa Iyengar
The Congress-led UPA alliance is taking revenge on the educated middle class which does not vote for them in any election (Was It Just a Mirage Then?, June 11). The rich, it knows, do not venture out to vote during polls and are ‘beyond democracy’. But since they are the ‘fund bank’ in elections, they continue to get all the sops. The poor get inducements come elections and are forgotten soon after. It’s the middle class which is marooned in the middle of a sea of problems. They can neither afford the lavish lifestyle of the rich, nor live the way the poor do. The leadership bankruptcy in the UPA is making it worse.
Shreenivas S., Bangalore
A couple of years ago, at the G-20 summit, Barack Obama was all praise for Manmohan Singh, saying, when he talks, the world listens. The media created an image of a despairing world and a wise Manmohan with all the answers, being listened to in rapt attention. Now the scales have fallen. The same government is clueless and apathetic. Or maybe it was the media that was clueless about the ‘dream team’ all along. Having fallen for its own version of reality, it can’t fault the government now.
V.R. Ganesan, New Jersey
The country has officially been declared a market economy. Socialism is treated as a social evil, and especially all kinds of subsidies. Reforms have meant not improving efficiency of retarded sectors but of the state relinquishing control from every sector. India’s high growth of the past years was matched with unprecedented tax collection. But the only area where state expenditure increased every year was defence—standing at a whopping Rs 1,90,000 crore. Before the administered pricing mechanism was removed, India had an oil pool account, meant to cushion the country from global swings. If a socialist state can’t do it anymore, while exiting all sectors of public funding slowly, why do we need a state?
Vinu Nair, New Delhi
It’s a funny form of socialism in this country where poor Mr and Mrs Dixit on their scooter are subsidising fuel for the guy in the background in his Mahindra Scorpio.
Sagar Bhattacharya, Patna
All these years post-liberalisation, you (or the media at large) had been party to selling the “grand dream” to the middle class. How come this empathy now? Have the cracks become too obvious to ignore?
Between the nothing-to-worry affluent class and nothing-to-lose underclass, those in the middle have everything to worry about and much to lose.
M.C. Joshi, Lucknow
The indecisiveness of our experts in matters of inflation stuns me. The growth rate is six per cent approximately, but the rate at which corruption is growing is 600 per cent.
When the whole world is in the grip of a financial nightmare, the euro and the EU itself is on the verge of a meltdown, and the US is teetering on the brink of recession, it’s stupid and facile to blame Manmohan Singh (or Sonia Gandhi) for everything. Blame the capitalist system, driven as it has been by years of rapacious greed, testosterone and cocaine-fuelled recklessness in the trading rooms of the West, political encouragement for people to live on credit and a total lack of responsibility and foresight among economists and politicians in Europe and America. That’s why the rupee is in free fall, growth is slowing and inflation is galloping. The situation is beyond the control of anyone in India. It’s said that when America catches a cold, the world sneezes, and right now the US and Europe are in the grip of a chronic disease. Ergo, our case of Delhi belly!
With the GDP growth at a nine-year low, escalating deficits, sinking rupee, uncertain markets, politics deep in the cesspool of unprecedented corruption, diseased policymaking, the prime minister in hibernation, petrol rates hitting the roof and prices of basic commodities rising too, UPA-II has immersed India deep in troubled waters. The ruling party might well write off the middle-class votes in 2014.
Of course, it was a mirage. One conjured up by idiotic TV anchors and pie-in-the-sky hacks. Trotting out cellphone densities, more IITs, unique ID for all, business tycoons spreading their wings globally etc etc. Amidst all this, the government busied itself appointing interlocutors for J&K, advisors for the Northeast, lulling us into believing terrorism would vanish if we just talked to Pakistan or played cricket, raking in moolah from IPL on the side.
V. Mahadevan, Chennai
With the increase in fuel prices, the target tax collections from fuel should exceed what was planned in the budget. So why not reduce tax on fuel? This has been done in states like West Bengal and Goa on the initiative of local leaders.
The cover picture of Outlook (Who cares For Mr and Mrs Dixit?, June 11) is typical of the Indian middle class family. An average Indian disregards all rules of personal safety, as exemplified by the Dixits—Mr Dixit is on a two-wheeler with his family—none of them wearing a helmet. Ironically, he is an insurance agent!
Saroja and others: I am a staunch environmentalist, but solar is weak in energy density. It is limited by the current, inadequate battery tech.
There will come one day, very soon, when a brilliant mind will solve the problem of safe and miniaturized nuclear reactor. Bill Gates is famously said to be interested in this. Nuclear, if it can be made safe, is so dense in energy, it can solve the energy problems for may be next 300 years. Solar, of course, is 'inexhaustible' as is geo thermal, wind, waves.... However they all are going to be limited by the current battery tech.
A power 'Internet' where producers feed into a interconnected power grid... Now there might be an idea worth exploring, since it might overcome the need to have batteries.
>>We must give them this credit inspite of the many fallacies & other negative sentiments over the years
>>We must give them this credit inspite of the many fallacies & other negative sentiments over the years
Solar panels for street light is a step in the right direction. Now providing free power for water pumps for agriculture has only made people stick to cheaper inefficient pumps. Here the emphasis should be to have solar powered water pumps. Technology exists for using optical fibres to "pipe" in day light inside homes and offices. The vision 2023 document says "Sunrise sectors such as biotechnology, solar and clean energy and nano technology based industries will be actively encouraged.
The Uzhavar Sandhais were encouraged by the previous Jaya Government just as much as the DMK, but in a low profile manner.
Yeah, the last ADMK government took up Rain Water Harvest Scheme (RWHS), while the present one is innovating with Solar Panels in all street lights. I must say we in TN have a Government that is hands-on in mitigating largescale socio-economic problems, from the Mid-day meal scheme in the 1960s to the planned Solar Panels on Street Lights. We must give them this credit inspite of the many fallacies & other negative sentiments over the years.
I have said something on these issues here:
Indian Budget: Killing the Goose that lays Golden Eggs !
Rising Petrol Prices: What Should be Done ?
Perhaps you may agree with me.
Well, I am no socialist. I believe in truly free markets and capitalism. The crony-capitalism of the 'greed-is-good, greed is all you need' riff raff will not work any more. This century will belong to those who can come up with holistic solutions that work well with the rest of the environment.
There is a lot to learn from our ancestors. Simply believing greed is good, is stupid. There is more to it than that.
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